Wayne OLeary

Is Public Plan the Answer?

As the US slouches haltingly toward health-care reform, progressives are agonizing over exactly what that phrase means and how to achieve it. Its no problem for centrists and conservatives. To them, reform of the medical system generally implies cost containment, not the expansion of benefits or entitlements for the public. Even the grudging acceptance on the center- right that everyone should be insured (up to a point) is couched in the phraseology of budget reductions and spending limits  the notion that universal coverage will save money for employers, hospitals, insurers, and the government.

Proper health reform will do that as a by-product, and its all to the good, but penny pinching is not what put the issue on the public agenda in the first place. Originally, the idea was based on a moral imperative to provide health care for those who, for a variety of reasons, couldnt afford it  to make it a right and not a privilege. There was a cost element in this to be sure, but it had less to do with global budgets and profit margins than with family budgets and the burden of unconscionable health-insurance payments.

The well-being of the broader public, medically and economically, is the reason progressive reformers have always gravitated to a system of national health care in which the federal government, not the corporate sector through its health-care industry, is the major player. A tax-based, government-run system can provide cheaper services because of economies of scale, administrative efficiencies, and an absence of the need to advertise or generate returns for stockholders. The question, of course, is what precise form a public system should take. This being America, full-scale socialized medicine on the British model, with the government owning the hospitals and hiring the doctors, is out. Although we have an established and effective form of socialized medicine for our military population through the Veterans Health Administration, the scare word socialism and all it connotes precludes extending it further.

A more doable approach lies with socialized health insurance, the system Canadians have had since the 1960s. The synonym for this is single-payer; its something Americans are more familiar with, because it already exists for those over 65 years of age. Under Americas partial single-payer, better known as Medicare, the providers of health care remain in the private sector; the federal government (the single-payer) merely picks up to tab. Making the transition to Medicare for all simply requires eliminating the nations profit-making insurance companies from the equation, an immediate money saver. Still, much of political Washington, including the Obama administration, is loath to pursue this course because insurance-industry opposition would make it controversial  that is, a political fight would be required.

Living up to his nickname, No-Drama Obama wants a reform all or most medical-care stakeholders (vested interests) can agree upon. In the forlorn hope of shaping a noncontroversial reform  any reform worthy of the name will necessarily be disputatious  the president and many Democrats have settled on what is being termed public provision. In essence, this means the long-term uninsured, those whose employers drop their job-based health insurance, and individuals who just want to switch carriers will have the option (under a system where coverage would probably be made mandatory) to choose a government-run public plan rather than one of the multitude of private plans.

The prospect of a universal system with a single-payer public option has panicked the political right and the big health insurers, who see it as a slow-motion road to dreaded comprehensive Medicare. They may be right. Any nonprofit public option should easily be able to undercut the profit-based private insurers on premium costs unless, as outrageously proposed by Sen. Charles Schumer (D-N.Y.), its competitive advantage were deliberately circumscribed by law. An estimate by the Commonwealth Fund, a think tank, predicts that a strong government insurer would immediately drain off 65-70 million customers from private insurance companies under a public-option system. Others estimate the figure as high as 130 million. The devil would be in the details, of course, including (besides cost) the level of benefits, the network of doctors, and the overall attractiveness of the public program.

Public provision may be the most practical avenue to whats truly needed, a profit-free system of health coverage, but it has inherent dangers. The public-option plan could be boycotted by self-interested physicians seeking greater compensation than it would allow; some are refusing Medicare patients right now because our existing system provides a lucrative alternative stream of non-Medicare patients who can be charged more. A doctors boycott or strike, such as Saskatchewan endured in 1962 when that Canadian province pioneered the single-payer (many of its doctors were British emigres hostile to the UKs socialized National Health Service), would be far less likely under a comprehensive single-payer system than under a public-option system; frightened patients could not be stampeded into purchasing safer private plans. Just as Canadas nationwide adoption of a federal single-payer in 1967 foreclosed job actions on the Saskatchewan model  recalcitrant physicians were left only with the recourse of leaving the country  the same could be guaranteed here by adopting a full single-payer.

The other major advantage of a comprehensive single-payer over public provision (aside from vastly simplified billing) is that it would prevent development of a two-tiered medical system. Under public provision, the wealthy would doubtless opt out of the public plan, with its basic, no-frills coverage, in order to buy upscale Cadillac plans in the private sector. Meanwhile, pressure would build from conservative lawmakers to save taxpayer money by cutting public-option benefits. If everyone were in the same single-payer boat, a nickel-and-dimed public program would be an impossibility.

In the end, none of this may happen. Instead, an adequately funded public provision could become, as liberal supporters hope, the countrys bedrock medical-insurance program, dwarfing and marginalizing costly and inefficient private-sector plans. Nevertheless, uncertainty can be avoided by moving directly to a comprehensive single-payer  Medicare for all. That, however, will require Barack Obama to court controversy, spend some political capital, and sacrifice a bit of his 60% popularity, something he has thus far been unwilling to do. The president needs to remember why hes there and whom he represents.